Short-Term Disability (STD) Insurance
Short-term disability insurance provides coverage for a limited period, typically up to six months, following a disability. Key features include:
- Coverage Duration: Benefits are usually provided for a period ranging from a few weeks to six months.
- Elimination Period: The waiting period before benefits begin is typically short, ranging from a few days to two weeks.
- Benefit Amount: Often replaces a higher percentage of pre-disability income, such as 60-70%.
Long-Term Disability (LTD) Insurance
Long-term disability insurance provides coverage for an extended period, potentially until retirement age or for the duration of the disability. Key features include:
- Coverage Duration: Benefits can last for several years, until the policyholder reaches retirement age, or for the lifetime of the disability.
- Elimination Period: The waiting period before benefits begin is usually longer, often ranging from 90 days to 180 days.
- Benefit Amount: Typically replaces a lower percentage of pre-disability income compared to short-term disability insurance, such as 50-60%.
Individual Disability Insurance
Individual disability insurance is a policy purchased by an individual, rather than provided by an employer. Key features include:
- Customizable Coverage: Policies can be tailored to meet the specific needs of the policyholder, including benefit amounts and duration.
- Portability: The policy remains in effect regardless of changes in employment.
- Underwriting: May require medical exams and underwriting based on health and occupation.
Group Disability Insurance
Group disability insurance is typically offered by employers as part of a benefits package. Key features include:
- Employer-Provided: Often offered at a lower cost or no cost to employees as part of their benefits.
- Simplified Underwriting: Usually requires less stringent underwriting, making it easier for employees to qualify.
- Limited Customization: Coverage options may be less flexible compared to individual policies.
Supplemental Disability Insurance
Supplemental disability insurance provides additional coverage to enhance an existing disability policy. Key features include:
- Additional Benefits: Increases the benefit amount or extends the duration of coverage beyond what the primary policy offers.
- Customizable: Can be tailored to fill gaps in coverage or address specific needs not covered by the primary policy.
Social Security Disability Insurance (SSDI)
Social Security Disability Insurance is a federal program that provides benefits to individuals who are unable to work due to a qualifying disability. Key features include:
- Eligibility: Requires a significant work history and payment of Social Security taxes.
- Definition of Disability: Strict criteria must be met to qualify, including the inability to perform any substantial gainful activity.
- Benefit Amount: Based on the individual's earnings history and Social Security contributions.
State Disability Insurance (SDI)
State disability insurance programs are available in some states and provide short-term disability benefits to eligible workers. Key features include:
- State-Specific: Available in states such as California, New York, New Jersey, Rhode Island, and Hawaii.
- Short-Term Coverage: Provides benefits for a limited period, typically up to one year.
- Eligibility: Requirements and benefits vary by state.
